On April 1, in an announcement that just a year or two ago might have been seen as an April Fools’ prank, McDonald’s said that by July 1 it would raise wages to at least one dollar above the local minimum wage in each of its 1,500 U.S. stores.
While this only applies to about 90,000 workers at company-owned restaurants, it puts pressure on the more than 3,100 McDonald’s U.S. franchisees, each running an average of about four stores each. These outlets have about 750,000 workers, who no doubt will clamor for their own pay hikes.
So why did McDonald’s do it, just a few weeks after Wal-Mart set off the wage-hike bandwagon among retailers?
At the heart of most arguments about the minimum wage lie franchising and fast-food businesses, with their high-volume, price-sensitive, customer-driven markets, and predominantly low-wage workforce. My research on the topic shows that the push to raise wages by McDonald’s can be attributed to the evolution of three separate themes—morality, economics, and politics—that have all been trending in favor of higher pay.
At the same time, the introduction of new automation technologies is requiring employees with higher skills—and pay. And the industry’s franchise nature may increase the pressure on others to follow McDonald’s lead.
The Minimum Wage Debate
Morality. Debates about a minimum wage for workers often focus less on whether the law should require it and more on what constitutes a “living wage,” a term increasingly used. If people agree that workers cannot sustain themselves and dependents under a certain wage and benefit level, then the moral argument becomes plain: they must receive something at or above that level, and a minimum wage pegged under that amount must be raised.
